Richard Green is a professor in the Sol Price School of Public Policy and the Marshall School of Business at the University of Southern California.
This blog will feature commentary on the current state of housing, commercial real estate, mortgage finance, and urban development around the world. It may also at times have ruminations about graduate business education.

Wednesday, April 27, 2011

This press conference looks like a more intelligent, faster-paced version of a congressional hearing. It's a lot of the same questions -- bond-buying, high oil prices, long-term unemployment -- except you would've gotten five lawmakers making speeches about gas prices before asking a single question. Bernanke looks the same as he does at a hearing. He's not exactly thrilled to be there, but happy to take questions as long as you want.

We concluded: "An eventual more precise analysis of urban cores and suburban trends will be welcome. Yet, as our analysis of trends in New Jersey indicated, even the growth in more urban core oriented municipalities was minuscule compared to the state's suburban growth. Further, much of the urban core growth in the nation came from areas that, although formally located within “city limits” actually were on the suburban fringe. This was true, for example, in Kansas City, Oklahoma City and even Portland. This suggests that the small share of growth reported in urban cores would be even less if it were based on census tract data; and suburbanization, as a way of life, may indeed be even more prevalent than this year’s numbers suggest."

She writes about how shrinking cities can take control of their destinies, while being realistic about what those destinies imply:

Detroit stands as the ultimate expression of industrial depopulation. The Motor City offers traffic-free streets, burned-out skyscrapers, open-prairie neighborhoods, nesting pheasants, an ornate-trashed former railroad station, vast closed factories, and signs urging "Fists, Not Guns." A third of its 139 square miles lie vacant. In the 2010 census it lost a national-record-setting quarter of the people it had at the millennium: a huge dip not just to its people, but to anxious potential private- and public-sector investors.

Is Detroit an epic outlier, a spectacular aberration or is it a fractured finger pointing at a horrific future for other large shrinking cities? Cleveland lost 17 percent of its population in the census, Birmingham 13 percent, Buffalo 11 percent, and the special case of post-Katrina New Orleans 29 percent. The losses in such places and smaller ones like Braddock, Penn.; Cairo, Ill.; or Flint, Mich., go well beyond population. In every recent decade, houses, businesses, jobs, schools, entire neighborhoods -- and hope -- keep getting removed.

The subtractions have occurred without plan, intention or control of any sort and so pose daunting challenges. In contrast, population growth or stability is much more manageable and politically palatable. Subtraction is haphazard, volatile, unexpected, risky. No American city plan, zoning law or environmental regulation anticipates it. In principle, a city can buy a deserted house, store or factory and return it to use. Yet which use? If the city cannot find or decide on one, how long should the property stay idle before the city razes it? How prevalent must abandonment become before it demands systematic neighborhood or citywide solutions instead of lot-by-lot ones?

Subtracted cities can rely on no standard approaches. Such places have struggled for at least two generations, since the peak of the postwar consumer boom. Thousands of neighborhoods in hundreds of cities have lost their grip on the American dream. As a nation, we have little idea how to respond. The frustratingly slow national economic recovery only makes conditions worse by suggesting that they may become permanent.

Subtracted cities rarely begin even fitful action until perhaps half the population has left. Thus generations can pass between first big loss and substantial action. Usually the local leadership must change before the city's hopes for growth subside to allow the new leadership to work with or around loss instead of directly against it. By then, the tax base, public services, budget troubles, labor forces, morale and spirit have predictably become dismal. To reverse the momentum of the long-established downward spiral requires extraordinary effort.

Fatalism is no option: Subtracted cities must try to reclaim control of their destinies. They could start by training residents to value, salvage, restore and market unused sites and the material found there. They might supplement school drug-free zones with subtraction-action ones by reacting quickly when nearby empty properties show neglect. Children who see debris-filled plots and boarded-up buildings learn not to expect much from life. Just planting a few trees often makes a deserted lot look cared for.

Thursday, April 21, 2011

In a New Republic piece, Chris Leinberger says that Wendell Cox's statement that the census shows that central cities have had a small fraction of urban population growth is beside the point. He argues, correctly, that the census definitions of urban and suburban are pretty arbitrary: if one is in the City of Los Angeles, she lives in an urban area, if she is in Santa Monica or Beverly Hills or Pasadena, she is in a suburban area. One visit to LA reveals that this is silly. Just because the light is there doesn't mean the missing keys are there.

But Leinberger then makes a statement that is also un-illuminating:

Likewise, the suburbs of those core cities include classic subdivisions and McMansions, like the home of Tony Soprano, but they also include booming places like Old Town Pasadena, Reston Town Center near Dulles Airport outside D.C., and revitalized Jersey City and Hoboken, NJ, on the other side of the Hudson River from Manhattan.

I now live in Pasadena, and before that, I lived in Bethesda. They are both indeed wonderful places (for me anyway); they are also quite "walkable." But neither strikes me as booming, so I looked up their population growth between 2000 and 2010. The Bethesda Central Designated Place grew by a little over 9 percent; Pasadena grew by 2.3 percent. The country as a whole grew by a little less than 10 percent. It is hard to make a case for booming.

But perhaps the issue is supply. If no houses are available, then it is not surprising that population has not grown much. Ryan Avent has correctly made this point. But the residential vacancy rates in both Bethesda and Pasadena are in excess of 7 percent--not huge, but not exactly tight either. And Pasadena's condominium market continues to face serious problems.

Personally, I love the kind a communities Leinberger favors--I seem to live in them. But some urbanists engage in hectoring that really bothers me. Lots and lots of Americans appear to love their cars and their isolated houses. So long as they interanalize the costs their lifestyle imposes (and I have long been for a tax that puts a floor on gasoline costs), people should be able to live how they like and where they like.

There is a triple threat facing the elder African American LGBT population in the Detroit area. Even though small in number, this particular group of people encounters difficulties in finding retirement homes, safety, recognition and financial security. Dr. Raphael Bostic, the assistant secretary of Housing and Urban Development, attended an April 16 summit organized by KICK (an agency for LGBT African Americans) to address such concerns. Dr. Bostic spoke to BTL about discrimination and other issues faced by these elders.

What were the common concerns discussed at the KICK summit?
The elder LGBT population has significant challenges. They don't have children who can offer them help and support. If they are with a partner they often don't have access to their (partner's) pension funds, so they can become extremely vulnerable rather quickly. This is a really important conversation, and a lot of the gay and lesbian elder population has not been a (focus) of that conversation. Somehow they are a hidden population.
Elders in African American communities have difficulties, elders in general have difficulties and LGBT elders have difficulties, so this really overlays three types of groups. We don't really know much about the challenges that this group faces and they are forced to be invisible because sexual orientation and gender identity are not protected classes, so landlords can and do discriminate against these (people). So sometimes they have to go back into the closet. One of the things we are trying work on is how often these issues arise so we can talk about it in an informed way and hopefully get to a place where that kind of discrimination happens a lot less frequently.

Tuesday, April 19, 2011

Are they telling us anything about the US fiscal condition that the whole world doesn't know? Is there anything to suggest that their past insights have been particularly penetrating? Just wondering...

Tuesday, April 12, 2011

I am on a panel on budget issues with Paul Ryan on June 9 in Madison. Needless to say, I am taking preparation for this very seriously. I would therefore welcome any thoughts, links, etc. from anyone inclined to send them. Don't worry if you think I have seen it before--I am looking for a dump of everything right now.

Sunday, April 10, 2011

Baldwin was also an "academic father" to scores of students, inspiring them with his quiet but deeply held passion for combining academic rigor with real-world applicability. Many of his students have become professors in universities across the world. His vocation is also carried on by his son, Richard, and son-in-law, Gene Grossman, both of whom are professors of economics specialising in international trade.

Lenders will not be able to order 4506Ts--tax transacripts--from the IRS. This is the principal source of income verification. Without it, lenders will not be able to underwrite borrowers.

Tuesday, April 05, 2011

The ten largest MSAs in 1960 (SMSA for everything except Chicago and New York, which are CMSAs) with current rank in parentheses.

New York (1)

Chicago (3)

Los Angeles (within a whisker of Chicago) (2)

Philadelphia (5)

Detroit (11)

San Francisco (13)

Boston (10)

Pittsburgh (!!) (22)

St. Louis (18)

Washington (8)

San Francisco is just San Francisco-Oakland--if one added San Jose it would be in the same position in 1960 and further up the ranks now. I forgot that Pittsburgh was once a top ten MSA. There is obvously a lot more persistence here.

Just for grins, I looked to see how the ten largest cities around the time I was born have changed in terms of rank. The top ten in 1960 and their current rank:

New York (still # 1)

Chicago (now 3)

Los Angeles (now 2)

Philadelphia (now 5)

Detroit (now 18)

Baltimore (now 21)

Houston (now 4)

Cleveland (now 45)

Washington, DC (now 24)

St. Louis (now 58!)

New York is a bit larger now, and has for more than 50 years been more than twice as large as the second largest city, making the spirit of George Zipf happy. LA and Houston have gained population as well as rank; the other seven all lost. St. Louis is hemmed in by a boundary that was drawn more than a century ago, but it doesn't lack land--the area north of downtown is basically field and forest. Cleveland, Baltimore and, of course, Detroit have lots of empty space within their boundaries as well.

For symmetry, let's look at where the current top ten were in 1960.

New York (1)

Los Angeles (3)

Chicago (2)

Houston (7)

Philadelphia (5) (note: the top 5 were all in the top 7 in 1960).

Phoenix (29)

San Antonio (17)

San Diego (18)

Dallas (13)

San Jose (57)

The cities in the second five moved pretty dramatically. They all had lots of available land in 1960 and are all, of course, sunbelt (although I suppose on could argue that northern California is not sunbelt).

What family an individual comes from explains about three-quarters of where they end up in the wealth distribution as adults. For African Americans, however, the impact of family background is substantially lower, at 37 percent.

Individuals are more likely to maintain wealth than to attain wealth, or more precisely, low-wealth children are unlikely to become high-wealth adults, while high-wealth children are very likely to be high-wealth adults. Looking at previous years’ data, less than 10 percent of children who grew up in families in the bottom wealth quartile, which had a maximal cut off of about $8,000 in 1984, reached high wealth levels by adulthood between 1999 and 2003 (when the top group’s minimal value was $82,501and the median was over $189,000). And over 55 percent of children who grew up in families in the top wealth quartile—over $155,000 of net worth back in 1984—held on to their high wealth levels by adulthood.

The strongest predictor of an adult’s relative wealth status is his or her income, which in turn is highly predicated on his or her parents’ income and wealth.

Wealthy white children are much more likely to become wealthy adults than wealthy African-American children: Over 55 percent of all white children raised by parents in the top wealth quartile hold onto the top wealth position as adults. This is contrasted to only the 37 percent of African-American children raised by parents in the top wealth quartile who hold onto the top wealth position as adults.